Property Boom in Morocco Causes Record Consumer Credit

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PROPERTY BOOM IN MOROCCO CAUSES RECORD CONSUMER CREDIT

Wednesday, 27 Aug 2008

The demand for consumer credit and mortgage loans to service the growing market for property in Morocco has caused competing banks to offer interest rates as low as 4.5% in order to cash in on the property boom, and mortgage maturities have also increased, even to as much as thirty years.

Investors and developers are flocking to Morocco to snap up prime real estate and develop it into high-class holiday accommodation or plush homes for the rich and famous. The amount of mortgage loans outstanding increased by a whopping 47% through June, to 125.9 billion dirhams ($16.3 billion), and consumer credit rose a little less by comparison, only 28% to 22.7 billion dirhams, according to a recent report from Morocco’s Central Bank.

The amount of loans outstanding in the Moroccan financial system grew 29% overall to a staggering 479.3 billion dirhams. In accordance with the encouragement offered by banks with the lower interest rates, which has enabled more buyers to enter the market and take advantage of the low rates, the price of property in Morocco has increased out of all recognition. The price hike is taking place despite the new houses that developers are building to satisfy the growing demand, which continues to outstrip supply.

Aided by the apparently limitless need for new accommodation in Morocco, the economy grew an annual 7% in the first quarter of this year, more than double the 3% growth experienced in the same time period last year. The demand for Morocco property shows no sign of slackening any time soon, as investors rush to take advantage of the financial incentives that Moroccan banks are offering, and prices seem set to continue their upward spiral. Those considering an investment in a Morocco property would be well advised to make their purchase before prices rise to new heights.